Tips on Spousal Support – Ensuring Tax Deductibility

Kasey Anderson

Spousal support is generally tax deductible by the payor and included in the income of the recipient. The Spousal Support Advisory Guidelines, the primary tool used by lawyers and Courts for calculating spousal support payments, suggest an appropriate range of spousal support calculated on the assumption that the payor can deduct the spousal support from their income, while the recipient must report it as part of their taxable income.

However, a number of circumstances can arise where the payor may not be entitled to deduct the spousal support payment, specifically in situations where the requirements of the Income Tax Act are not met. The following is a list of situations which may deem a payor ineligible to claim their spousal support payment as a tax deduction:

1. Where there is no agreement or order: If there is no order or agreement requiring the payment of spousal support, any voluntary/informal spousal support paid will generally not be tax deductible pursuant to the Income Tax Act. However, “written agreement” has been broadly interpreted by the Tax Court to include written documents, even if not signed, which “show the essential terms and conditions of the agreement between the parties, and their intent to create a binding contractual relation” (see Hutchings v. The King, 2025 TCC 108). Written agreements have been found to include a mediation report confirming terms of agreement reached at mediation, but unsigned (see Hovasse v. The Queen, 2011 TCC 143) and correspondence exchanged between counsel (see Foley v. The Queen, 2000 CanLII 232).
2. Where spousal support is paid in a lump sum: If the order or agreement specifies that prospective spousal support is payable in a lump sum, generally no amount of the lump sum will be deductible by the payor as spousal support on the basis that the Income Tax Act requires that support be payable on a “periodic basis” (which generally means monthly) to be deductible.
3. Where payments are “uncharacterized”: If the order or agreement specifies that a support payment is “uncharacterized” (or amounts are not clearly specified as “child support” and “spousal support”) no amount will generally be deductible by the payor as spousal support.
4. Where child support not fully paid: If the order or agreement specifies child support and spousal support payments, priority is given to the child support, meaning that all payments made are first considered to have been made toward child support. As such, child support payable to a recipient must be fully paid before any amounts paid as support for the recipient can be claimed as a deduction.

Considering the above, it is important to obtain legal advice prior to determining the amount of spousal support payable and how that obligation is formalized.